Biodiesel, Made From Soybeans, Is Catching On

CARL'S CORNER, Texas — The corn grows tall for miles around this truck stop, 80 miles south of Dallas, but it's another crop, soybeans, that has engines revving in these parts.

Since spring, when the town's founder (and truck stop owner) Carl Cornelius began selling an alternative fuel known as biodiesel, countless drivers have become self-proclaimed converts of the diesel-soybean mixture. They claim that it is cleaner-burning and more fuel-efficient and makes their tailpipes smell faintly of French fries.

Biodiesel got a recent boost from President Bush and has even picked up endorsements from celebrities, such as country singer Willie Nelson. The crooner not only uses biodiesel in his tour bus, but he is also peddling his own blend, called BioWillie, right here at Carl's Corner.

Biodiesel is a mere drop in the fuel bucket compared with conventional gasoline, diesel and such alternative fuels as grain-based ethanol, which federal air-quality regulations mandate be added in California and some other states.

But high oil prices and increasing government incentives caused U.S. production of biodiesel to surge to more than 36 million gallons in 2004, a fivefold increase over five years, according to Energy Department statistics. The National Biodiesel Board, the industry's trade association, predicts output will jump to 60 million gallons this year.

"The oil companies are pumping every ounce they can get out right now. They're certainly trying to take advantage of all their refining capacity and high oil prices," said Bob Williams, a project director at the Washington-based Center for Public Integrity. "For Joe Consumer, anything that can add to the supply that isn't tied to pulling oil out of the ground should help prices in some way."

The biodiesel industry was started by soybean farmers looking for a productive use for the oil left over from making soy meal, but the fuel can be made with any vegetable oil or animal fat, including recycled cooking oil.

Although the pure fuel is incompatible with the natural rubber found in the hoses and gaskets of vehicles made before 1993, when blended with conventional diesel it can be used in a traditional diesel engine without modifications. Biodiesel, boosters say, reduces the production of harmful pollutants such as carbon monoxide, carbon dioxide, sulfur dioxide and hydrocarbons.

"You go to California or New York, they don't want smoky trucks," said Jim March, who logs up to 3,000 miles a week for SidCo Transportation. "It doesn't burn your eyes when you fill the tank. Diesel would burn, and you couldn't hardly see straight."

Loaded up with BioWillie on a recent weekday here, March said his 18-wheeler ran smoother than it did on diesel. And at night when the 56-year-old trucker sleeps in his rig, he said he could feel it "purring" rather than shuddering and "loping." Like many truckers, he leaves the engine running to operate the air conditioning or heat. On biodiesel, his gas mileage has increased to 7 miles per gallon from 5.5 miles with conventional diesel, March said.

In a spiral-ring notebook that Cornelius has left on a table near the cash register since he began selling BioWillie, one customer wrote that his VW Jetta diesel got 42 miles to the gallon on biodiesel, "going 80 mph with the air on."

Although biodiesel can be blended at any level, a 20% mixture known as B20 is one of the most common ratios because it maximizes environmental benefits without compromising price, once tax incentives are factored in.

"It hit the tipping point once the price became right," said Peter Bell, partner in Willie Nelson Biodiesel Co., which began selling the singer's 20% blend of biodiesel and conventional diesel last fall. "Before the tax incentives came into place, biodiesel was always more expensive."

Starting Jan. 1, a federal tax credit put biodiesel prices on par with regular diesel, slicing the per-gallon price of the blended fuel by one penny for every percentage point of biodiesel from agricultural sources.

The national average price of wholesale diesel fuel hovers near $1.65 a gallon; the same amount of B20 costs around 22 cents more a gallon without the tax credit.

Some states have lowered taxes to encourage biodiesel use. California isn't one of them, taxing biodiesel at the same rate as petroleum diesel.

But in Texas, the fuel excise tax on B20 was reduced to 16 cents a gallon in 2001 from 20 cents a gallon previously. And since the tax went into effect, the number of biodiesel stations in the state has doubled, to eight from four.

Illinois reduced its tax on the biodiesel portion of biodiesel blends up to B10. Blends of B11 and higher get a state sales tax exemption, which has made the blend cheaper than conventional diesel and spurred a booming B11 market there.